Saturday, January 2, 2010

Execution is the Key to Improving the Federal Acquisition Process

As 2009 is now in the books, the year ended with plans submitted to the Office of Management and Budget (OMB) by the 24 federal agencies that account for 98% of contract actions. As reported by NextGov, these agencies have identified $19 billion in acquisition-related savings, also announced by OMB in their report on the plans.

These plans will not be made public until spring 2010, when an online dashboard focusing on the savings is launched, in addition to “a combination of strategies,” according to Jeff Zients, federal chief performance officer and OMB's deputy director for management. These plans will apparently focus on program terminations and reductions, spending caps, and more competition with procurement actions.

I for one look forward to the plans, because the lack of information and the “identified savings” seem to be cherry-picked actions with no real long-term impact, focus on real process improvements and business case analyses, contract restructuring, or ways to improve human capital strategic planning. One good area of the plans are a renewed commitment to strategic sourcing and leveraging the buying power of the government. However, details are non-existent, in addition to a strategy that relies on increased use of agency-wide and government-wide contract vehicles, which also need a further look as abundant waste is indicative in the use of these contract vehicles as standardization is needed. However, the inherent culture of “uniqueness” across government will deter this needed analysis on these contract vehicles, and create further waste with any strategic-sourcing initiatives since buying power will not be leveraged to the maximum extent possible.

Encouraging examples were given in the report, such as the Department of Homeland Security (DHS) standardizing desktop operating systems across the department, allowing DHS to award a single contract for all necessary IT products and projecting cost savings of $87.5 million. Also included are examples of savings through in-house engineering expertise for a manufacturing or design flaw, and a new online reverse auction service implemented by Energy. Although these are steps in the right direction, I hope the plans move forward in a more strategic way, or these initiatives will be the equivalent of placing band-aids on wounds that require a tourniquet.

The report continues by discussing how agencies are also seeking to find the right balance of contractors and federal employees. The reporting agencies have apparently developed pilot programs to determine the appropriate number of contractors and federal workers and will report on progress under these programs by May 2010. According to OMB, these pilots will be assessed to find ways to “insource” or add resources for contract management. A better use of resources would to create strategic human capital plans now that include a balanced workforce based on skills and capability needs. I would like to think that adding resources for contract management would be a known fact, so it makes better sense to forgo pilots and execute. The time for further pilots and studies has passed, we need action now. Although each reporting agency is required to submit a human capital plan for acquisition by March 31, 2010, I hope the balanced workforce is part of the plan. We shall see.

Finally, the third area of the report is to address one of the vital administration priorities; a reduction of high-risk and noncompetitively awarded contracts. In discussing these contracts, Zients said:

…"carry the greatest potential risk of overspending taxpayer resources." He said the "explosion" of these contracts -- the use of which increased by 129 percent between 2002 and 2008 -- is a concern. Agencies are working to meet the president's goal of reducing money spent through such contracts by 10 percent, and will report twice a year on their progress…

This is an area of concern, as the administration and OMB want to restrict the tools available to the workforce, and add insult to injury by focusing on symptoms and not the disease. The acquisition workforce is understaffed and undertrained, and do not have skills, capabilities, or tools to perform. One of the resulting factors is an explosion in sole source procurement actions, as contracting personnel forgo competition in an effort to increase contract velocity in a desperate and increasingly futile attempt to keep up with the workload. Creating an environment where only fixed-priced contracts should be used, regardless of the requirement or appropriateness of another contract type, has already been attempted and will only lead to more waste, fraud, and abuse. The reality is that more needs to be done with less, and increased communications and collaboration through Gov 2.0 tools is a promising endeavor that should bear fruit (See Better Buy Project). These tools will not solve everything certainly, but will go a long way to improving the acquisition process, and help standardize and improve methods to increase competition, lower costs, and change outcomes for the better.

This year-end report from OMB continued a disturbing trend on their part in 2009 through a lack of specificity, guidance, and leadership instead of creating an environment of risk-taking, accountability, and a renewed focus on oversight. I hope that 2010 is a year for execution, but apparently we’ll have to wait until March 2010 before we get a roadmap on how we can move the process forward.

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About Me

Mr. Gracia is President and CEO of Seville Government Consulting. He is an experienced consultant in government contracting and procurement processes, focusing on small business and government clients. He has 20 years of professional experience providing consulting support for the acquisition, training, and management of services and technology in the government and commercial sector including numerous DoD and Federal civilian agencies. He is a Navy veteran, actively supporting military organizations such as the USO, Soldier's Angels, and serving as CFO for Cigars for Warriors.